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tv   Mad Money  CNBC  February 3, 2014 6:00pm-7:01pm EST

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buddy holly. and bok choy, my friend. hartford financial. i think it's good enough where you see a relief rally in this name. >> i'm for more "fast." meanwhile, "mad money" starts right now. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to try to help you find it. "mad money" starts now. hey, i'm cramer! welcome to "mad money." welcome to cramerica. other people want to make friends, i just want fewer days like today. my job is not just to entertain but explain what happened. call me at 1-800-743-cnbc. we have got a straight down market. doesn't matter if it's good or bad. if reported a terrific quarter or horrendous one. almost all stocks are coming down. witness the dow plunging 326
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points, s&p plummeting 2.28%, nasdaq diving. we've got to tick down the reasons for the decline so you're aware and can be ready for the next leg. first, people are afraid of a second weak employment number in a row when we get the nonfarm payroll number on friday. you know what, they should be afraid. all right? should be concerned. the research from "get rich carefully" shows one number can be explained away, but two? no. whether or not you think it's true or false. it doesn't matter. the market asterisks nothing. it takes stocks right to the wood shed. second reason for the decline, the recession stocks, the foods, the drugs, the staples. they're acting like it's the end of the world, or at least the end of the developed world. the declines in these stocks are
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breathtaking. when the global economy slows, these stocks are supposed to go higher, but they aren't. maybe the emerging markets aren't strong enough. people are getting nervous that the safe havens are no longer safe. even with treasuries rising in price and the yield going down. it is a quandary. the only stocks that are rallying are the ones without any sense of value. facebook galloped higher this morning before declining in the afternoon. but it's pulling in huge amounts of high-growth momentum money. fourth explanation, retail sales are monstrously horrible. i can count on one hand the number of companies doing well in this sector and most are just hoping for mediocrity. you have to take retail with a grain of salt. but this isn't typical action, people. many are totally thrown off by where all the shoppers have gone. first, we thought the consumers gravitated from soft goods,
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clothes to hard goods. then we thought perhaps everyone had gone online, right until we got that less than superb number from amazon. plus, all through this period, we've had the reverberation of starbucks ceo howard schultz' admonition that mall shopping might be a thing of the past. it's not usual to hear such declarations. and everything in the mall, including starbucks, even as it's hardly a mall retailer keeps getting hit. you see target today? the awfulness of the numbers for the big discounters like a target, walmart, sears, takes your breath away. chipotle we'll hear from tonight. fifth, aerospace had been a major linchpin of growth. but ever since boeing reported, this group is giving up the coast. even though there's no evidence of a slowdown. i really think this group is buyable, particularly because of the strong airline numbers, but i feel i'm totally alone in thinking that. you've got to stay tuned. we've got to go off the charts to figure out how low it can go because it's been gripped by the
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technicals. sixth reason for the selloff, the government, it just pancaked us. now there's no doubt about it, the government should be apologetic for what it did, just apologetic. it's good that washington basically declared war against business with the consumer -- well, let's say both, consumer and business just crushed by the shut down which turned out worse than we thought. obamacare has seriously sapped the confidence of the business community. in the meantime, the pullback in food stamps, well that was poorly timed. just awful. now we're hearing talk about the debt ceiling and worrying that the government's going to run out of money. i doubt washington cares. i know from my research for "get rich carefully," it's cost 5%. let's not forget the cutoff of extended unemployment benefits while the sequester cuts remain in place.
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i don't know how our government could be more out of touch with its people. a new fed chief has come in precisely the moment we need the steadiest and most experienced hand. and the fed is no longer as good of a friend as it was. janet yellen may be exceptional, but she's being tested hard now. the ten-year treasury rates looked like they were about to soar through 3%, now looks like they're headed for 2.5%. that's a slowdown. it's a slowdown. eighth, the emerging markets in a severe downturn and become the saving grace of so many of our companies because they were growing as consequence of having more children. right now, the turmoil is so severe, it's bleeding to the more developed countries. ninth reason, commodities are in collapse. normally might be a good thing for inflation, now all it's doing is suggesting china's having a screeching halt. there's no information that's the case. they've been saying there is no chinese slowdown.
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it doesn't matter. china's being written off right now. even in a moment when europe's coming back. it's bad news for the stock market. tenth explanation for the pain, the meaninglessness of earnings reports. oh, boy, so many good ones. but they've meant nothing. nothing at all. person like me that does research, it's ridiculous. people have been crowding to the hyper growth stocks, but that came to an end today. no bargain hunters, just bargain haters. meanwhile, the charts, they're just plain hideous. although, eventually we'll reach oversold territory, and we could get better. remember what we saw on off the charts last week, we said it could be another leg down. we're in that leg. means the downward sloping charts are in control. i've been saying for a little bit, i haven't liked this market all that much and urge you to sell these up openings. that's been right to do. we're carrying a large cash position for
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i thought it was time to do a little picking later in the day. but you know what, for now, the sellers keep coming out the woodwork at every level. in the end, though, i find it hard to be too negative after we've come down during a period where i expected a pullback. the u.s. remains strongest of nations, lots of opportunities to grow jobs if the government were to take them. perhaps the repatriation of money held offshore to fix infrastructure. the poison in washington shouldn't defeat such common sense ideas. let me give you your bottom line here. on this hideous day, it is time to hunker down, people. come out of the fox hole to pick at your favorite companies and much lower than expected prices for companies with sound earnings. logical first step, same as 2009, go for the accidentally high yielders which are coming in hot and heavy. work then, it will work now. miada in new york, please. >> caller: hi, jim, this is miada, i'm calling ability
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molina health care. and i want to know should i sell or hold on to it? >> let me tell you my strategy on these. if you like -- what i like to do is buy the company that reported the best quarter in that industry well point recorded a great quarter, the stock ticked at 81, that tells me that industry is good. we're going to hear from humana and aetna. it is not best of breed. well point is best of breed. chris in pennsylvania, chris? >> caller: hi, jim, boo-yah, pennsylvania. >> hey, how you doing, chris? >> caller: good. good. we just got about an -- i don't know, maybe a foot of snow here. so i was calling to ask you a general opinion on the stock gnrc, it's been beaten up in the past couple of months. >> generac needs big storms that shut down power. because it's a momentum stock. and we haven't had that.
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now, you had a foot of snow in philadelphia, it's really, really tough. but you need to be a shutdown of the grid in order for people to go buy generators and that hasn't happened, so generac sales may not be equal to what the momentum people want. can i go to alan in north carolina, please, alan? >> caller: hey, jim, this is allen, i wanted to talk to you about trena solar. i was wanting to know what you think about it. which way you think it sold -- >> well, i happen to like first solar. i think they told a very good story. nobody cares right now. allen, you could have the greatest solar story in the world and it just doesn't matter right now. i got stocks that yield 3%, 4%, 5% that aren't stopping to go down. but at least i think those bouts before trina. no way around it, today, it was
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brutal. i would come out of your fox hole a little bit and pick out your favorites. i would say look at the accidentally high yielders because the decline's been . >> boeing's gone from first to worst as the poor performance lowers the altitude of the averages. tonight, cramer checks the technicals to see whether this lagging leader could soon turn or if more turbulence is ahead. and later, recipe for success? chipotle has been on a roll doubling in a little more than in the last year. but the company warns prices may be on the rise. could this foil the burrito maker's future? plus, retail redefined? in the battle for brand power, disruptive start-ups like birch box are changing the way
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consumers get introduced to the products they love. could this innovator give you a heads up on what's working ahead of the valentine's day shopping spree. find out when cramer goes off the tape. all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer #madtweets. send jim an e-mail to or give us a call at 1-800-743-cnbc. miss something? head to when you order the works you want everything. an expert ford technician knows your car's health depends on a full, complete checkup.
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yep, paid that too. alright we're good then. man i feel like i'm forgetting something. eh, it's probably nothing. you worry too much ted. alright, hammer down! bank from almost anywhere with the citi mobile app. citi, with you every step of the way. here's a puzzler for you. turbulent day, dow down 326 day. wow, blood bath day. we ask what the heck are we supposed to do with some of the great ones. what are we supposed to do with boeing? i've stressed over and over again this is one of my absolute favorite companies with tremendous ceo, one of my bankable 21 from "get rich carefully." one of the chief executives i believe you can trust. management gave cautious
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guidance, causing the stock to get pole axed. boeing dropped 8% last week and now down nearly 15% from its highs two weeks ago. the worst performer in the dow jones average. pretty awful, right? was the best performer last year. i think it was safe to say that boeing is in a situation where the performance of the stock has become separate from the performance of the underlying company. i believe in the company, but right now the company is not in control. that's why tonight we're going off the charts to figure out where boeing's headed. because when the stock comes unglued from the fundamentals like this is right now, the charts could be incredibly useful, which is why i've devoted a whole chapter to technical analysis, which i've never done in get rich carefully, which by the way i'm signing tomorrow night after a little bit of a speech at union square, barnes and noble new york city right after the show. and when it comes to boeing's charts, tim collins, a terrific technician as well as my colleague at does not like what he sees. you might think after an 8% decline, the pain at boeing would be over, but collins thinks it can keep falling,
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falling for a few more weeks. in collins' view, not all is necessarily lost for the bull. on the one hand, the big gap down last week, boeing dropped from 137 to 131 overnight, makes things difficult. gaps are important to technicians. to collins, this says 131 will act as a powerful ceiling of resistance above the stock, way above -- way, way below where it was a couple of weeks ago. that's not good. on the other hand, collins points out that boeing has this gap effect working for it. not just against it. because the stock had recently had not one but two gaps higher that have now become powerful floors of support underneath it. back in october, boeing gapped up overnight from 122 to 125, and right now, that stock is testing that gap. collins thinks this is a crucial area. how the stock reacts, how it responds to it will be extremely important to judging its trajectory. consider the commodity channel down here, commodity channel index, that's the cci. this is a tool for technicians to use to tell whether a stock
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is overbought or oversold. it's come up too far too fast. considered to be very oversold in this index which is a signal that the stock is due for a bounce. right now, boeing at negative 252. people, that's insanely oversold. but if the stock keeps hanging around this 122 to 125 area, then collins says you need to be careful about how the next few days play out. if boeing closes below 122, not if it drops below that level on an intraday basis and bounces. but if it actually gets a close underneath 122, then he believes the stock will be in a lot of trouble. to collins, a close below 122 triggers another breakdown possibly sending boeing to 110, 111, 113, which is the next -- created by that gap back in september. that would be a hideous decline. and you'd get hurt. before you write collins off as being bearish, i want you to consider boeing's weekly chart. collins points out something very similar happened in august of 2011. back then, boeing had a big
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initial drop, the stock entered oversold territory and the commodity channel index and then it bounced. first, there was a second leg lower. yeah. so if boeing follows that same august 2011 trajectory, if it has the same percentage decline, stock's going to fall to 112. remember, it's exactly the downside target collins sees on the daily chart if the stock breaks 122. i'm doing this not to be a downer, i'm trying to be as realistic tonight as i can be. another point, boeing is not particularly oversold on this weekly chart. in other words, this longer term picture of the stock's trajectory. it may not be ready to bounce. it does decline to 112.50, it would push boeing right down to its 50-week moving average. okay? which has served as an excellent floor for the stock several times over the past years. it got so far from that moving average. that's like this is a depiction of so many of the stocks.
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collins used this to illustrate how it caused the stock to lose the uptrend that began in january of last year. there's nothing chart wise standing in the way of boeing declining to that 111, 113 level. so right now, collins is saying you need to wait, wait and see for the next few days. if boeing closes below 122, he thinks it's time to jump out the emergency exits because we could be headed for a crash landing. yeah, it's not the way i think. but collins does hold out one hope here. if boeing can regain some attitude and trade back above 125 for a while, it's possible the pain could be over. for now, though, collins thinks that boeing stock is basically in technical no man's land. i think boeing has become a battleground between the fundamentals as airlines around the world are flush and they want the more fuel efficient planes, especially the dreamliner and the technicals, which you see from the charts are pretty ugly. and that's the war, guys. right here. and i could show you dozens and dozens and dozens of stocks with an identical chart.
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but here's the bottom line, if you believe in boeing, the company, like i do, then you might want to buy some here on the way down. but given collins' interpretation of the charts, you've got to save some capital on the sidelines in case the stock gets slammed like collins says could happen. keep in mind, though, when stocks go lower, yes, they get cheaper. and if the worst prediction comes true, then i think it would be a steal at those levels. dan in wisconsin, dan? >> caller: hey, we love you here in wisconsin. i've got to tell you, i really like "get rich carefully." >> you're terrific. thank you so much. signing tomorrow night union square barnes and nobles, 7:30. how can i help? >> caller: my stock is lockheed martin. i've been looking at it for a while now. i was wondering with this downturn in this market if now might not be a good opportunity to pick a starting point and start buying a little bit. >> well, you clearly have read the book because you know that's exactly how i'd be thinking with lockheed martin. the quarter was fine, there was a little noise to it. the business is good.
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the stock yields 3.6 -- here's what you do, when that stock yields four, but not until then. zachary? >> caller: hi, jim, how are you? >> all right. how are you, zach? >> caller: i saw today that whole foods market was upgraded. and i saw you wrote an article a while ago, as well, i looked at your portfolio. what i want to ask you is this, do you think in a year from now that whole foods and costco will be up? or what's your opinion on those two? >> well, first, i appreciate that question more than anything i've heard tonight. you're taking a yearlong perspective, i think whole foods will be up. does that mean it'll be up tomorrow? if i say the stock's going to be up tomorrow and it's down, people are going to laugh. that's not my game. i believe whole foods has a great long-term trend. the trend is to eat healthily. same trend is behind chipotle's strength. these trends aren't going away, they're getting stronger. today was dark and stormy, sometimes fundamentals and technicals just don't add up.
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don't panic, but keep cash. you may need it. after the break, i'll try to make you more money. coming up -- chipotle's out to make a big bang with the latest push. >> why are my cows exploding all over the internet? >> find out more just ahead. >> that's progress. [ male announcer ] we all think about life insurance.
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what can i say about chipotle? in a market where it feels like everything's getting killed, especially the retailers and restaurant names, chipotle knocked it out of the park. blowout quarter. very similar to the seahawks what they did to the broncos. how does chipotle do it? put up a 9.3% gain when wall street was looking for a 6.7% increase. almost all of that on higher traffic. not only that, but while other companies saw things get worse and worse over the quarter, for chipotle, december was better than november. and the conference call management said january was also terrific. i think some of the strength has to do with the fact it's become one of the standard bearers for the huge healthy eating wave i talk about in get rich carefully where people, especially younger people have become suspicious of the traditional food chain and only want to eat natural organic. chipotle understands this better than anyone which is why they created a whole darn television show called farmed and
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dangerous, about the predictableness of the food chain. and i have to tell you, this is, indeed, one of the funniest things i've ever seen. i watch them over and over again and it's getting the company's message across. >> side effects? >> do they know what caused the cow to explode? >> if it wasn't jihad, i would put my money on the petroleum. let's not overthink it, all right? they pay us to fix their image, not their cattle. >> it's also a terrific growth story with consistently fabulous execution. last year, they increased the store count. investors will pay through the nose for this kind of growth. the stock rallied $58 on friday and only gave up eight measly points today. let's check in with chipotle's bankable chief financial officer to hear more about the quarter and where the company's headed. you're a numbers guy. so i'm watching all the farm and
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dangerous. what it says, i don't trust the food chain. that doesn't necessarily draw me to chipotle. how do you justify the return on investment on this? >> jim, it's a great question. you know, we've always moved away from what i would call traditional, you know, restaurant advertising, which often is based on a limited of time offer, a game or gimmick to get people to rush into the restaurant. what our marketing team, and our chief marketing officer focused on is more about creating curiosity. we believe if people are more curious about where their food comes from, and i think farmed and dangerous as a satire is a great way to do that in an entertaining way and caused people to wonder about their food supply, where it comes from, how the animals are raised. but do it in an entertaining way. and we think by piquing that curiosity, the more people learn about where their food comes from and how it's raised, chipotle will benefit, people will appreciate more and more what we do at chipotle. >> i have to tell you, i have a lot of the companies on that
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buck marshall represents, the fictional character. and they do talk about making food affordable at any cost. i mean, did you ever look at the transcripts of some of the companies that do seed work? and they're saying all the things, the fictitious buck marshall says. >> right. and, you know, jim, the thing is that most of the food production or a lot of food production in this country is based on making it cheap in the short-term. what a lot of companies fail to do is consider what the long-term effects are. i think chipotle's a great example of we can consider the long-term effects and care about how animals are raised, crops are raised. and the health of our consumers. but we're also here to show we can build a strong business model around it, as well. we end up, even though we pay a lot more for our ingredients to raise the animals and crops the way we want to in a responsible way, we also charge a fair price to our customers and yet we still have strong financial returns. we're here to show that you can have it all.
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you can be responsible, you can charge a fair price so that everyone can eat this better food made from higher quality ingredients and have a business model that works. you can't be thinking month by month or quarter by quarter. >> one of the things i think you guys have had to do, slight raised price. you mentioned things are more costly. i'm looking at beef prices going up big. and i'm wondering, holy cow, to get the stuff that is not buck marshall, the gmo labeling, to stay away from gmo, from cheap stuff that's substitute for food. it may outrun your pricing structure at some point. >> yeah, but here's what we do, jim. we value our food and ingredients and making sure we can continue to buy higher quality food. and we feel like we're never done, always trying to upgrade the quality of our beef, steak, produce all the time. we build our business model around finding efficiencies and other things. that's why we build relatively strong restaurants, we build the restaurant and design them so we can serve a lot of customers in
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a short period of time. we don't complicate the menu. and we spend as a percent of sales probably lower than other restaurant companies on marketing. so we would rather find efficiencies in the other line items than food. because we feel it only makes sense we should put our priority on finding the best ingredients, even if it means paying more, a lot more because our consumers will appreciate it and, again, over the long-term, it's a more responsible way to run our company. >> at what point does it become bad blood? at one point, buck marshall in the farmed and dangerous video says it cites the 99 cent value meal as something he's in favor of. at one point, you were connected with mcdonald's. to me, that was a direct shot at mcdonald's. are you saying, look, to each his own? >> jim, we don't want to pick a fight with other restaurant companies or food producers, what we want to do is raise awareness. we think that if there's a level playing field where the issues, you know, on all sides are
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raised, that when people are more curious about where their food comes from. when companies understand that people do care about how their food is raised and care more about the sustainability, the responsibility the way food is raised. and maybe are willing to pay a little bit more than they have in the past that we hope other companies will make better decisions. we would love it if other companies such as mcdonald's or other competitors would take a page out of our book and look for the same kind of high-quality ingredients we're seeking. we think everyone should eat better and seek these higher quality better ingredients. >> also, you have a great social media, but it's mostly kind of retail. when i go to your tweet followings, a lot of them are what people, you know, basically they want to work for chipotle. 97% of managers started out rolling burritos? >> yeah, we still, you know, have this belief that our best managers will come from the crew we hire today. and so it will vary. used to be 97%, we're between
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85% and 95% our managers come from crew. and we love to hire top-performing crew who believe in where we're going who are ambitious. they can come in with no restaurant experience whatsoever. we'll teach them how to cook, how to use a knife, run the business. and they can move from crew through the manager ranks and become a general manager in a restaurant and make a, you know, nice salary, nice bonus, get a company car and we'll teach them all that as long as they have the desire, the enthusiasm to serve customers, they have a belief in what we stand for in terms of our food, in terms of responsibly raised ingredients. if they love to cook, those are all things once they come into our company with those desires, we can teach them the rest of the business. and our best managers by far -- and we looked at this over a long period of time, by far are the managers that come in as crew, learn the stations and really become vested in the company. >> yeah. we know that from -- i know that from my chipotle in brooklyn. now, you mentioned the location
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a dozen times. really a gleam in the eye. right to be emphasizing it right now when it's got years to go before you would ever think about introducing it nationally? >> well, yeah, i think to talk about in any kind of a national rollout is way too premature. just like some of our other growth options, with chipotle international and chop house, we have six restaurants. we're not in a hurry. we believe if we take the right approach and right pace and use the same formula that we use for chipotle and it's great-tasting food made from high-quality ingredients and real cooking in front of the customers, top-performing crew that have this desire to run to serve customers and to serve great-tasting food. and then an economic model, and chipotle is the best economic model in the restaurant industry. we think we can apply those same three competencies. we'll have an even bigger impact on changing food culture in this company. we're looking at a couple other
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locations. two great partners. they both also -- just like steve ells came from fine dining and the pizza, jim, is out of this world. and while we're excited about it, it is just one restaurant and we're not going to get ahead of ourselves. but we think some day it can feed a lot more people and follow the same mission we have with chipotle, the chain food culture. >> i do have to ask you -- my twitter feed is, would you please ask him to split the stock? i know that's not what you're here for. but that's what people want. >> yeah. you know what, jim, we don't talk about splitting the stock. we think that's more window dressing. we think the way to add shareholder value is to focus on the things that make chipotle special. food culture, grow at the right rate, and we know we can have shareholder value. splitting the stock doesn't seem to -- other than window dressing, doesn't seem to have much substance to it. >> that's why you're the best performer, you do it with the numbers which is what matters.
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jack hartung, thank you so much, jack. go to the videos. they're self-explanatory. they're brilliant. stay with cramer. let me talk to you about retirement. a 401(k) is the most sound way to go. let's talk asset allocation. sure. you seem knowledgeable, professional. would you trust me as your financial advisor? i would. i would indeed. well, let's be clear here. i'm actually a dj. [ dance music plays ] [laughs] no way! i have no financial experience at all.
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that really is you? if they're not a cfp pro, you just don't know. find a certified financial planner professional who's thoroughly vetted at cfp -- work with the highest standard.
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it is time -- it is time for the "lightning round" on cramer's "mad money." it's about rapid-fire calls, you say the name of the stock, i tell you whether to buy or sell. play until that sound and the "lightning round" is over. are you ready skedaddy? time for "lightning round" on cramer's "mad money." dan in rhode island. dan? >> caller: boo-yah from rhode island. hey, alcoa took a jump up in the 11 to 12 range. do you think it has any room to run? >> i think in this market, alcoa can go to ten easily, but i want you to buy it when it gets
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there. marlene in nevada, please, marlene? >> caller: hi, jim. >> hi, marlene. >> caller: i'm calling about wendy's. i love the stock but doesn't seem to be going anywhere. >> we have a terrible market now. wendy's reported great quarter, doing everything right, the chart looks bad, that's in control, goes to eight. let's go to carol in illinois. carol? >> caller: yes, i'm wondering what you think of baidu. >> sell, sell, sell. >> way too hard to own chinese stocks with the slowdown. we want to be in the tried and true names right here. larry in tennessee. larry? >> caller: is this j.j. cramer? >> yes, it is. >> caller: hey, jim, thanks for all you do for us. >> much appreciated. >> caller: i wanted to talk to you today about lyb. >> they reported a terrific quarter, it yields a little bit more than three. this is one i know they just reported. i think it's absolutely terrific. it is coming down, again, because of the chart and
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weakness overseas. but i like lyondell, and i would be a buyer in weakness. jason? >> caller: jim, seahawks boo-yah from oregon. >> congratulations. it was a beatdown. go ahead. >> caller: great game. my question's after the positive data in the pullback, where do you think it goes? >> i think it's a great speculative situation that a lot of people are going to keep going back to, and i would actually be a buyer of medivation. david in tennessee, david? >> caller: yes, i am. >> what's up? >> caller: hey, jim, thanks for taking my call. i'm in a position at a company ato, i bought it at $18.40 and the 65 range right now. and based on what president obama said the other night in the state of the union, i think that natural gas is going to go through the roof. >> you've got -- you're a pipeline, it yields three, if you feel that way, go buy kinder
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morgan partners kmp, twice the yield and all the natural gas you want. let's go to ralph in new jersey, please, ralph? >> caller: yeah, jim. big boo-yah from seaside heights, new jersey. >> thanks for calling. how can i help? >> caller: how about them seahawks? >> they looked darn good. what can i say? >> caller: they were great. i was asking about sirius xm. >> now, again, this is considered a speculative stock. it's getting hammered. doing that deal. what can i say -- i don't back away from something. i liked it at 370 now at 355. i've also liked it in the $2 range. i think it's a good stock. can i go to jane in new york, please, jane? >> caller: hi, jim. >> hi, jane. >> caller: what's your take on sfl. i like their dividends. >> the stock yields like 10%. we have to do more work on that. i don't understand how that -- when i see that size and i know that rig is under pressure and that ensco, which is so good, under pressure, i have to see whether that yield is -- yielding six for heaven sake!
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it's a giant foot race. a foot race to outrun the decline in china. and it's become so all encompassing, it distorts almost every conference call i follow. it starts inauspiciously enough with chatter from mastercard, symbol m.a., that of course, the slowdown matters but the stabilization of europe plus the great secular trend from paper to plastic currency will remain terrific, tail winds. none of these positives matter, the china talk with the guide down with lost account. went from a long loved stock to a praia in a second. it would have been a totally different story. instead, mastercard said something like the increase in china will more than make up for the loss of even a very big customer, perhaps, as the chinese travel more. the slowdown is real he said on the call. quote, china's growth has slowed in domestic expenditure, which
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impacts us very little because we don't get to play in the domestic processing. the saving grace of an in-country slowing, i guess. but still chilled people. take warehouser, the huge lumber company, went out of the way to say while china is slowing, prime minister abe's economic growth policies are giving japan a much-needed boost could offset chinese weakness. if china hadn't slowed -- the company defaulted to the old but true saw that the chinese are still experiencing the great migration. when we hear these days we kind of think, oh, see through skyscrapers, always being talked about. we know the crane business isn't doing so well. otherwise caterpillar would've quoted about it in the report recently. the china sag dinged mattell, although the slowing in their key categories, dolls, underperformed their u.s. categories. mattell at least had a demographic comeback to any slowdown in china which is the relaxation of the one-child
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policy which could spur growth among infants. kimberly clark is feeling the same way as diaper sales are growing. how about last thursday when diagio the worldwide liquor conglomerate crushed its own stock when it talked about the spirits clampdown going on in china where the communist party has done the best of late to temper the party. not everybody had negative things to say about the prc. wind stocks soared. when management said macau was performing. perhaps driven more chinese to the macau tables. it's a great quandary to me that honeywell and united technologies cited terrific development for the climate control. the 30% growth in china was exceptional, called out specifically saying the world was slightly improved when he came on the show last week. boeing ceo and his reviled conference call had nothing bad to say about china. however, ibm's chinese sales were bad.
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i bet cisco says the same thing when it reports, at least i don't think that will be much of a surprise. china's become such a downer that i wonder if apple's china mobile deal is widely perceived as a bust already because of the slowdown in chinese spending. talk about a company that can't catch a break. in the end, you wonder real irony here, contrast yahoo's call with google's call. more than doubled since mayer took over. but alas, that's slowed, too. google, though, the stock flew up 45 points on friday. google's doing everything right. and it didn't have to explain away china. after all, it doesn't do any business there. stick with cramer. (announcer) scottrade knows our clients trade
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about everything that comes standard with our base auto policy. and if you switch, you could save up to $423. liberty mutual insurance. responsibility. what's your policy? at a time when conventional retail's faltering, a big reason for the market's decline including today's vicious down swing. it's worth remembering we're in the middle of a sea change in the way people shop. and an enormous shift in buying habits that favors the internet. if you want to understand the real cutting edge of this trend, sometimes go off the tape and look at smaller, fresh-faced privately held companies that could be major game changers. so tonight, let me introduce you to birchbox, if you don't know it already. this is an online beauty and grooming business that has reinvented, not just the way we buy cosmetics, but perhaps the way we buy everything.
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birchbox, you subscribe to their service. you give them your personal information and then every month they send you a box of hand-picked samples like hair, nails, skin care, make-up products. if you like the samples, you can go on the website to learn more about the products and buy full-size versions of them. kind of like an online sephora, except, they're overwhelming. birchbox holds your hand and sends you samples of exactly the kind of stuff you're likely to want. they've created a new way of shopping using the web that's easier and that demystifies the whole process. no wonder this company, which was only founded back in 2010 already has over 400,000 active subscribers around the world. let's take a closer look at what this revolutionary business is doing with haley barna, birchbox's co-founders and co-ceos who started this right after business school. thank you so much for coming on.
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>> thank you so much for having us. >> okay. one of the things we're at a quandary about is we know that retail's gotten bad in the country and we say bad because we look at these comparable store numbers from the traditional retailers, and we wonder where the shoppers went. are they going to you? >> definitely some of them are coming to us. the reason we started birchbox was because we realized that consumers will shifting more of their shopping behavior on the internet, but they weren't shifting their beauty shopping online. because women want to try the products before they buy them. so what was happening online was only replenishment. what we think birchbox has done is change the conversation. you can shop on the internet, buy things for the first time but it doesn't have to be something you know. we are getting people to buy something that they just sampled and then, you know, now they know they want it. >> how do you get paid? both ways? >> so, we have a few different revenue streams, subscribers pay us $10 a month if they're women, $20 if they're men because they get a little juicier product.
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they love something they try, we're a retailer, hold inventory and sell full-size versions of the products. >> hold inventory. so you're different from the amazon model. >> yes, we hold inventory. we want to make sure the customer's experience is completely seamless. the other realization we had was so much friction between discovery and purchase, you read about something in the magazine, fold down the piece of paper, you're meant to go and remember to pick that up next time you're in the store. we want it to be inspirational and then right when you're reading that article, watching that video, the samples are in your bathroom and you're ready to transact, we have your credit card, your address, buy it from birchbox. >> one of the things we've seen is the malls have become big shopping centers from online. what's to keep me from saying, look, i like this brand, but i'm going to go to amazon to get it. >> yeah. that's the reality of our business, some of the products we do sample, you can pick it up at the mall, pick it up at sephora, but there's a few things we do to make sure people come back to us. we have a ton of content. watch videos, read articles,
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learn how to use them, the buy button's right there, and a generous loyalty program, so they can fill out feedback surveys and earn points that effectively give them discounts in the products. and more and more, we have exclusives for a few of the products you see here, you can only buy on >> one of the reasons we're doing this segment and not meant to be frivolous on a down 300 day. the idea is that one day, these companies might come public and instead of saying, i hear birchbox is hot and you'll get none is be able to indicate to your broker well ahead. obviously birchbox would at some point like a liquidity event, right? >> sure, yeah. and we've always said we think this is a really big idea. a game-changing idea from the industry. and more than ever, we see that we really do have the potential to be a stand alone company. so we're very excited our business model has always had multiple revenue streams, we've been able to fund growth. but, you know, we obviously recognize we are still very early in our business.
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>> sure. no, that's okay. you have to hit it early in order if you're a retail customer, you can't come in late. one last question, how do you know -- this is for men. >> for instance, i have nothing in my knees, i was a runner for years and years, i have nothing, i cannot use this. would you know that and therefore not send this to me? >> when customers sign up, they fill out a short profile, tell us about their needs and preferences so we're able to target the jump rope to someone really excited about using that jump rope. >> look, i think this is one of the reasons why the mall's done not as well because there are things that are better than the mall and easier. >> personalizing. >> yes. >> we have hundreds of thousands of stores personalized to the customer. >> and that's what howard schultz says has to happen. birchbox's co-founders and co-ceos. bringing companies to you, one day you might want to buy their shares. stay with cramer.
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i know @jimcramer on twitter, there's a lot of people who say, you know what, this one's not for me. i said we're going to get a pullback, when we get a
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pullback, i don't do one of those things where now we have to have a real big pullback. we've been going under the assumption that the s&p can drop maybe three, four. when it gets there, we want capital. there's always a bull market somewhere, i like to say, there's always a bull market somewhere. i'm jim cramer and i will see you tomorrow. welcome to "the kudlow report." i'm larry kudlow. it's 7:00 p.m. eastern and 4:00 p.m. pacific. it's a rough day on wall street. let's go to the floor of the new york stock exchange where bob pisani has a recap of all of the day's action. good evening, robert. >> hi, larry. stocks sold off today with a dow closing at a 3 1/2 month low. the market started to the downside but took another leg down when january manufacturing data and auto sales both came in weaker than expected. everybody cited the weather, of course. but there are concerns


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